Innovation effects of information and communication technologies: Evidence from Canadian firms

Abstract

This paper offers empirical evidence that Information and Communication Technologies (ICT) significantly boost both product and process innovation across Canadian industries. Using longitudinal data from the Canadian Workplace and Employee Survey (1999–2005), the study finds a positive, significant link between ICT adoption (measured by computer usage) and four types of innovation: new products, improved products, new processes, and improved processes. From a policy standpoint, the findings highlight the value of supporting ICT adoption to drive innovation and productivity. Two mechanisms are identified: (1) direct investment effects via reduced ICT costs, and (2) indirect spillover effects through organizational and knowledge transformation.